Brazil's Corn Ethanol Boom Draws Wave of New Projects

October 24, 2025

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(The AgriBiz) Together, they could lift corn ethanol output more than 50% in just two years, pushing supply from 8.2 billion liters in the 2024/25 crop year READ MORE

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Excerpt from Grain Central: The rapid expansion of Brazil’s corn ethanol industry has become a critical component in meeting the South American country’s escalating demand for renewable fuel after the government raised the nation’s ethanol mandate yet again. While ethanol production from sugarcane, historically Brazil’s primary feedstock, has stagnated in recent years, corn-based ethanol output has surged on the back of growing domestic corn production.

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While much of Brazil’s grain output has typically been exported to international consumers, the trajectory for corn is shifting. Although corn exports have risen over the past decade, domestic consumption has also increased, primarily driven by exponential growth in the corn-based ethanol industry. According to the corn industry ethanol group UNEM, corn ethanol currently represents 23pc of total ethanol production in Brazil, and it expects it to grow to around a third in 2025-26 and account for more than 40pc of national output over the next decade.

Consequently, the domestic corn crush for ethanol production has grown from 400,000t in the 2015/16 season to 18.3Mt in 2024-25, accounting for around 15pc of the nation’s total corn output. It has jumped by 85pc since the 2022-23 season, when the crush was only 9.9Mt. Brazil’s growing corn ethanol capacity reflects the country’s broader push toward renewable energy and its ambition to become a global leader in sustainable biofuels.

According to the domestic sugar and ethanol industry group UNICA, the nation’s ethanol production from corn rose nearly 31pc in the 2024-25 cycle, reaching 8.2 billion litres. And given the rapid rate of investment and infrastructure development, production is poised to almost double to 16 billion litres by 2032, pushing corn for ethanol demand to almost 36Mt. Meanwhile, sugarcane ethanol output has remained relatively flat since the start of the decade, sitting at around 28 billion litres annually, maintaining Brazil’s position as the world’s largest producer.

The construction of corn-based ethanol processing plants has primarily been concentrated in the centre-west states of Brazil, a region where the second-crop corn, or safrinha corn, production has skyrocketed over the past decade. In fact, the rapid growth in safrinha corn output has been a significant driver of the corn ethanol evolution and is expected to generate substantial economic benefits for the country’s agricultural regions.

Brazil has been producing corn-based ethanol since 2014, with the early offtake coming from sugar mills that had been modified to process corn when sugarcane was not available during the summer wet season. The country’s first dedicated corn ethanol plant opened in Lucas do Rio Verde, Mato Grosso, in 2017.

The industry utilises three types of plants: full plants, which are corn-only facilities, flex plants, which are adapted sugarcane mills that usually process sugarcane but switch to corn for about three months during the “inter-harvest” period, and flex-full plants, which can process both feed stocks simultaneously, allowing year-round operations.

More plants being built

There are currently 25 operational corn ethanol plants in Brazil, with an additional 15 facilities under construction. At least 12 more have reportedly received regulatory approval.

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The increase in domestic demand for corn is not confined to the ethanol sector. Demand from the stockfeed industry, in particular the poultry sector, is robust. Brazil is the world’s second-largest poultry producer and the largest poultry exporter globally. READ MORE

Excerpt from International Valor: However, the new investments are only becoming viable through subsidized credit—especially loans from the Climate Fund of the Brazilian Development Bank (BNDES)—or through higher equity contributions from shareholders, Mr. Theodoro said.

São Martinho, for example, secured R$500 million from the Climate Fund and R$125 million via Finem to finance its R$1.1 billion investment, bringing the average cost of its loans to 8.5%.

Among projects without subsidized credit, the solution has been to inject more equity. That is the case of Grupo Potencial, which announced a R$2 billion investment. Carlos Eduardo Hammerschmidt, the company's vice president, said that using internal funds “is an important differentiator that shows the group's financial strength and the confidence we have in the bioenergy sector.” He added, however, that the group is “in talks with BNDES to access the Climate Fund and with Finep, through programs such as 'More Innovation'.”

According to Mr. Theodoro, equity now accounts for about 50% of the investment volume on average, a level he considers the minimum necessary to make a project “sustainable” given current interest rates.

Not all companies are able to put together sound financial structures in a 15% interest rate environment. That's why 11 projects—together representing R$7 billion in investments—are still awaiting better financing conditions. Of these, six were already announced in 2024 and remain on hold.

Projects underway are expected to be completed within two years, adding 3.1 billion liters of annual production capacity.

Geographic expansion

The Matopiba region—which includes parts of Maranhão, Tocantins, Piauí, and Bahia—is among the top destinations for new corn ethanol investments. But the region poses a challenge: ensuring a stable corn supply for the plants.

Unlike Mato Grosso, where the winter corn crop benefits from favorable climate conditions after the soybean harvest, Matopiba's second-crop conditions are less favorable, meaning the region will likely need direct incentives to boost summer planting.

For now, local corn supply still exceeds demand, but new ethanol plants could consume nearly all of that surplus unless production expands.

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In Rio Grande do Sul, only anhydrous ethanol is expected to be produced, but in many other states, hydrated ethanol will also be made. That could boost local competitiveness for this biofuel—or allow it to be shipped to regions with higher demand. READ MORE